Google Faces Breakup Call as EU Parliament Patience Wanes

Unbundling Search Engines From Other Services Should Be Considered, Says Proposed Law

Published on November 24, 2014.

A European Parliament bid for legislation splitting up Google may send a message that's too loud to ignore as European Union antitrust regulators review a possible settlement with the owner of the world's largest search engine.

Google, already grappling with privacy and competition issues, risks another EU headache as some lawmakers seek to follow a successful attack on bankers' bonuses with measures to break up the search giant.

"This represents a new escalation for Google," said Greg Sterling, VP-strategy and insights for the Local Search Association. "There's some question about whether breaking up Google would actually happen -- however it does indicate the depth and intensity of the critical antagonism and challenge that Google confronts."

While the parliament doesn't have the authority to compel regulators to draft legislation or alter their antitrust probe, it can amend proposals by the European Commission. Lawmakers used this procedure to shoehorn extra curbs on banker bonuses into legislation toughening capital requirements in the wake of the financial crisis.

The bonus measures prompted outrage from U.K. Chancellor of the Exchequer George Osborne, who only abandoned his legal fight against the rules last week after an adviser to the EU's top court said the rules barring bonuses more than twice fixed pay were legal.

Difficult attack
Attacking Google may be more difficult for the parliament than the bonus rules, according to lawyers. That's because the assembly, which meets in Brussels as well as Strasbourg, France, has fewer powers in the competition field.

Google, which has more than 90% of the search market in many European countries, is being targeted by a group of parliamentarians who say the commission should consider legislation if it can't wrap up a lengthy antitrust probe into the company.

"Unbundling search engines from other commercial services" should be considered, according to a draft resolution for a parliament vote on Nov. 27 that didn't specifically mention Google. The assembly will debate digital issues in Strasbourg from 7 p.m. on Nov. 26, according to the parliament's online calendar.

'Antitrust populism'
The commission's antitrust investigation into allegations that Google promotes its own services above rivals hits a four-year anniversary later this month. The Brussels-based EU authority has been weighing complaints for at least five years.

The parliament's attempt to influence a legal investigation is "antitrust populism," said Nicolas Petit, a law professor at the University of Liege in Belgium. Such efforts "have not been going beyond gesticulations and rightly so." The assembly "has little if no powers in this field" as it is only consulted on EU law.

There's no end in sight after the EU delayed plans to settle the case amid criticism from rival firms that Google's concessions wouldn't solve competition problems.

Margrethe Vestager, the EU's new competition chief who started work on Nov. 1, will decide how to take the Google probe forward once she's heard from "those most directly affected," said Ricardo Cardoso, antitrust spokesman at the commission.

Al Verney, a spokesman for Google, declined to comment on the lawmakers' draft resolutions.

Politicians' patience with Google started to wear thin this year. German and French legislators voiced concern over Google's control of the search market and the chief executive officer of German publisher Axel Springer SE said he was afraid of the company.

Google has also been criticized by some privacy regulators over how it's complying with an EU ruling that upheld a "right to be forgotten" and ordered Google to cut links from search results on a person's name if asked.

For some of the members of the European Parliament, "being seen as standing up to Google may be a popular choice," said Geert Glas, a lawyer at Allen & Overy in Brussels. "Elements of Google's service offering may well have to be tailor made to specific European concerns as we are already witnessing with the right to be forgotten."

The parliament still needs to decide the final statement they want the assembly to vote on. A second draft asked antitrust regulators to find a tough solution to curb the company and didn't mention splitting it up.

While the two lawmakers sponsoring the resolution, Andreas Schwab and Ramon Tremosa, said they aren't opposed to Google, they "are against monopolies" and in favor of "fair and neutral search," according to an e-mailed joint statement today. Unbundling is just one of several ideas they proposed including legislation for search engines, they said.

"For Europe to ask a global player as Google to also adapt its structure would be akin to Europe overplaying its hand," said Mr. Glas.